Crypto asset manager 21Shares has announced plans to liquidate two of its bitcoin and ethereum futures exchange-traded funds (ETFs). This decision comes amid a downturn in the cryptocurrency market, driven by concerns over a potential economic recession.
Liquidation of ARKY and ARKC ETFs
The two ETFs, the ARK 21Shares Active Bitcoin Ethereum Strategy ETF (ARKY) and the ARK 21Shares Active On-Chain Bitcoin Strategy ETF (ARKC), are scheduled to be liquidated on or around March 28. Investors will have the opportunity to trade their holdings until the end of the trading day on March 27.
21Shares stated that the liquidation is part of a routine review of its product offerings to ensure alignment with market trends, client needs, and the evolving landscape of digital assets.
Fund Strategies and Expenses
The ARKY ETF aims for capital appreciation by investing in bitcoin and ether futures contracts, while the ARKC ETF focuses on capital growth through a combination of bitcoin futures contracts, the ARK 21Shares Active Bitcoin Futures Strategy ETF (ARKA), and cash equivalents. Both funds are actively managed, with expense ratios of 1% for ARKY and 0.93% for ARKC.
Impact on Investors
Investors holding shares in ARKY or ARKC at the time of liquidation will receive payouts based on their share of the fund’s net asset value. These payouts may result in taxable events, and investors are advised to consult tax professionals regarding potential tax liabilities.
At the time of this report, 21Shares and ARK Invest had not responded to requests for further comment.
Crypto Market Slump
The liquidation of these ETFs comes as the cryptocurrency market faces significant challenges. Both bitcoin and ethereum ETFs have underperformed recently, as investors shift toward safer, lower-risk assets such as bond funds amid growing concerns about trade wars and the possibility of a recession.
The iShares Bitcoin Trust (IBIT), the world’s largest crypto ETF, has fallen by 9.3% year-to-date. Bitcoin’s price is down around 10% for the year, and ether has seen a significant drop of 42%.
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